Buy Future Lifestyle Fashions; target of Rs 464: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss' research report on Future Lifestyle Fashions

Future Lifestyle Fashion’s (FLF) Q1FY18 LTL revenue jumped 35.3% YoY and LTL EBITDA improved 32.4% YoY. Key positives were: i) 29.4% YoY SSSG in FLF stores (10.1% YoY in base) aided by 31.1% SSSG in Central and 31.2% SSSG in Brand Factory versus industry growth of 14‐15% YoY; and ii) flattish LTL EBITDA margin despite end of season sales (EOSS) in Q1FY18. Though gross margin fell YoY due to EOSS, LTL improved YoY. Other expenses rose YoY due to higher ad spends and credit card charges (INR50‐60mn). While Q2FY18 has started on a weak note, management expects revival due to upcoming festive season and is confident of 11‐ 12% SSSG (our view: 12% SSSG growth in Central) in FY18. We envisage recovery in urban consumption to boost sales growth. Maintain ‘BUY’.

Outlook
We expect 12% SSSG in Central in FY18 aided by recovery in urban consumption and better execution. On account of sharpened focus on power brands and closing of loss making stores (Planet Sports) we revise up target multiple to 16x (from 15x) FY19E EV/EBITDA and arrive at revised TP of INR464 (INR416). We maintain ‘BUY/SO’. At CMP, the stock is trading at 13.7x FY19E EV/EBITDA.
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